Buying & Selling a Sectional Title Unit

When you buy a freestanding house, you acquire a plot of land and everything on it. You own it outright — the soil beneath, the walls, the roof, the garden. Transfer into your name follows a well-worn path: deed of transfer, municipal clearance, transfer duty, Deeds Office registration. Done.

Buy a flat, apartment, or townhouse unit, and the picture changes significantly. You acquire ownership of a defined portion of a building — your section — along with a proportional, undivided share of the common property (the entrance lobby, pool, passages, parking areas, and the land itself). You also become a member of the building's body corporate the moment the transfer is registered in your name. That membership brings ongoing obligations: monthly levies, conduct rules, and collective responsibility for the common areas.

From a conveyancing perspective, sectional title transfers involve additional documentation, additional parties (the body corporate, and sometimes a Home Owners' Association), additional clearance certificates, and a few extra legal hurdles that simply don't exist in a conventional full title transfer. Understanding them before you sign is not just sensible — it can save you from a very expensive surprise.

Think of the levy clearance certificate as the sectional title equivalent of a municipal rates clearance certificate — except instead of the municipality signing off, it's the body corporate (usually through its managing agent) confirming that the seller owes them nothing.

Before the conveyancer can register the transfer of a sectional title unit, they need written confirmation that all amounts owing to the body corporate in respect of that unit have been paid in full — or that satisfactory arrangements for payment have been made. This confirmation is captured in a formal levy certificate (also called a clearance certificate) issued by the managing agent or, where there is no managing agent, by the body corporate itself.

There is an important distinction to bear in mind: the levy clearance certificate itself is a private document between the managing agent and the conveyancer. What makes the transfer happen at the Deeds Office is the conveyancer's certificate — a legally prescribed document in which the attorney certifies, on the strength of the levy certificate, that all body corporate amounts have been settled.

Here's something many buyers overlook: the levies attached to a sectional title unit are more than just a monthly payment. They represent the financial health of the entire scheme — and as an incoming owner, you inherit the ongoing obligations.

Before signing on the dotted line, there are several things worth investigating. First and most obviously: are the current levies in arrears? The seller is obligated to pay all amounts owed to the body corporate up to date of registration. If they haven't, the body corporate will simply refuse to issue the levy clearance certificate, and the transfer stalls. But "up to date" is a moving target — make sure you understand what period the managing agent has quoted for, and budget accordingly.

Second: what are the ordinary monthly levies? These are calculated based on each section's participation quota — essentially its proportional share of the total scheme. Larger units generally pay more. Levies cover the day-to-day running of the scheme: common area maintenance, insurance on the building, municipal charges for common services, and the body corporate's administrative costs.

Third: is there a reserve fund in place? A body corporate is legally required to maintain a reserve fund for future major repairs and maintenance — things like roof replacement, elevator overhauls, or repainting the entire building. A scheme with a well-funded reserve is generally better managed than one that relies on ad-hoc special levies every time something breaks.

Here's where many buyers — and some agents — get confused. A body corporate and a Home Owners' Association (HOA) are not the same thing, and in some properties you will be dealing with both simultaneously.

A body corporate exists by operation of law — it is automatically established the moment a second owner enters a sectional title scheme, and every unit owner is automatically a member. It governs the building and common property within the scheme itself. It can't be opted out of, and it disappears only if the scheme is wound up.

A Home Owners' Association, by contrast, is a creature of contract and condition. HOAs are typically found in larger, security-conscious estate developments — where a township has been established with multiple streets, multiple sectional title schemes, communal parks, entrance booms, security guards, and shared infrastructure. The HOA manages all of that broader estate infrastructure, and both freehold plot owners and sectional title unit owners within the estate are usually required to be members.

HOA conditions are imposed as restrictive conditions at the time the township is proclaimed. These conditions are carried into the title deed of each property in the estate — including each sectional title unit in any scheme located within that estate. So even if you're buying a flat and not a freestanding house, if the flat is within an HOA-governed development, those conditions apply to you with full legal force.

The HOA conditions typically impose two requirements on an owner: first, compulsory membership — you must join the association and comply with its rules; and second, a restriction on transfer — the unit cannot be transferred to a new owner unless the HOA has issued a clearance certificate confirming no amounts are owed and the new owner has agreed to the membership conditions.

When the title deed of a property contains a condition that restricts transfer without the consent or clearance from a named person or entity — such as a Home Owners' Association — the conveyancer is legally required to obtain that clearance certificate before lodging the transfer documents at the Deeds Office. This isn't optional. If it's missing, the Deeds Office will simply reject the lodgement.

The HOA clearance certificate serves a dual purpose. It confirms that the seller has no outstanding amounts owing to the association — whether that's monthly HOA levies, special contributions, entrance fees, or any other obligation. And it simultaneously acts as the HOA's consent to the transfer, giving the green light for the new buyer to step in as the next member.

One important practical point: the new buyer does not need to provide a separate written acceptance of HOA membership as a lodgement document. The HOA clearance certificate, by its very nature, constitutes the association's consent to the transfer — and membership of the new owner follows automatically from the title conditions already registered on the property. The consent is embedded in the clearance, not in a separate form.

The foundation of any property transfer cost structure is the same regardless of whether you're buying a full title house or a sectional title flat: transfer duty (or VAT if the seller is a VAT vendor), conveyancer's fees, Deeds Office fees, municipal rates clearance fees, and the usual sundries. But sectional title adds a few line items that simply don't exist in full title transactions.

The most significant additional cost from the buyer's perspective is the levy-related set of expenses. The managing agent charges a fee for issuing the levy clearance figures — this is separate from the actual levy amounts. It's an administration fee, and it comes out of the purchaser's pocket as a transfer cost, unless the parties have specifically agreed otherwise in the sale agreement.

Then there is the pro-rata levy refund. The seller is required to pay levies in advance for whatever period the managing agent specifies. If registration happens mid-month or mid-quarter, the buyer must refund the seller for that unused portion — from the date of registration to the end of the pre-paid period. This appears as a debit item on the buyer's account and a corresponding credit on the seller's.

On the seller's side, the account is typically shorter — but it does include the requirement to bring levies up to date for the period specified by the managing agent. This isn't simply "owe nothing at the time of sale" — it usually means paying levies in advance for a defined period so the managing agent can issue the certificate. The seller also remains responsible for their proportion of the rates, any bond cancellation costs, and (if applicable) estate agent's commission.

That parking bay outside your flat. The private garden area enclosed off your ground-floor unit. The storeroom on the third floor. These are what the law calls exclusive use areas (EUAs) — portions of the common property that have been allocated for the exclusive use of a particular unit's owner.

Here's the catch: the exclusive use area is not automatically transferred along with the unit, even if you bought them together as a single package. An exclusive use area registered as a real right must be formally ceded — transferred by means of a notarial deed — simultaneously with the transfer of the section. Miss this step, and you could end up owning the flat without actually owning the right to that parking bay.

The distinction between how the EUA was originally created also matters. Some exclusive use areas are registered as formal real rights — in which case they appear on a separate title deed, can be encumbered with a mortgage bond, and follow the formal cession procedure described above. Other exclusive use areas are created simply by the conduct rules of the scheme — in which case they are merely personal rights, not real rights, cannot be bonded, and don't require a notarial cession to transfer. The scheme's sectional plan and rules will tell you which type you're dealing with.

One more nuance: a registered exclusive use area can also be sold by an existing unit owner — but only to another owner within the same scheme. You can't sell your garden area to someone who doesn't own a unit in the building. The law ties exclusive use areas to the scheme, not to the open property market.

Here is perhaps the most underappreciated part of buying into a sectional title scheme: the rules. Every sectional title scheme operates under a set of management rules and conduct rules that govern how the building is run and how owners and tenants behave. These rules have the force of law between the body corporate and the owners — and ignorance of them is not a defence.

The management rules deal with internal governance: how often the body corporate meets, how trustees are elected, quorum requirements, financial management procedures. The conduct rules deal with daily life in the building: noise, pets, parking, use of common areas, renovations, short-term letting, keeping of outdoor furniture on balconies — the works.

The conduct and management rules of a scheme are publicly accessible — they are registered with the Community Schemes Ombud Service (CSOS). Your conveyancer can obtain a copy, or you can request one directly from the body corporate or managing agent as part of your pre-purchase due diligence. Reading them before you exchange is not excessive caution; it is simply responsible buying.